Feng Chia University
College of Finance
Graduate School of Finance
Fall, 2013
COURSE
Corporate Finance 公司財務 (財金碩一)
INSTRUCTOR
Ming Jing Yang, Ph.D. (楊明晶)
Associate Professor
OFFICE
1234, Business Building
OFFICE HOURS
6:00 p.m. - 10:00 p.m. Friday
TELEPHONE
(04)2451-7250 Ext. 4158
E-MAIL ADDRESS
mjyang@fcu.edu.tw
WEB SITE
http://mjyang.idv.fcu.edu.tw
TEXT
S. A. Ross, R. W. Westerfield, and J. Jaffe, Corporate Finance, 10th Edition,
2013, McGraw-Hill. (華泰書局代理).
R. A. Brealey, S. C. Myers, and F. Allen, Principles of Corporate Finance, 10th
Edition, 2011, McGraw-Hill.
OBJECTIVE
This is an advanced seminar course in the field of corporate finance. It will
discuss the major topics of financial asset valuation, option valuation, riskreturn analysis, corporate investment decision, capital structure decision,
dividend policy, financial derivatives and hedging risk, evaluation of financial
performance, and international corporate finance, etc. Class presentation and
participation are strongly encouraged. Research projects will be assigned to
students. The purpose is to familiarize graduate students with the theories and
concepts learned from the class and apply them to the real financial world.
PREREQUISITES
Mathematics, Accounting, Economics, Statistics,
and Introduction to Financial Management.
EXAMINATIONS
The course grade will be determined as follows:
Performance:
Presentation (20%)
Projects
(20%)
Participation (10%)
50%
Final (comprehensive)
50%
Due: 2013/12/04
2013/12/25, Wednesday, 3:10~5:00p.m.
COURSE OUTLINE
Corporate Finance
Chapter
01
Topic
Introduction to Corporate Finance
Goals of the Corporations and Financial Managers
Agency Costs
Asset Valuation:
04
08, 09
Discounted Cash Flow Valuation
Effective Interest rate, Continuous Compounding,
Perpetuity, Growing Perpetuity, Annuity, Growing Annuity,
Financial Markets, Present Value, and Future Value,
Interest Rate, Consumption Decisions, and Investment Decisions
Valuation of Bonds and Stocks
Bonds: Valuation, Yield to Maturity
Stocks: Valuation, Dividend Growth Model, NPVGO Model,
and Price-Earning Ratio
Financing with Derivatives:
22, 23
24
Options and Corporate Finance
Options, Call Options, Put Options
Two-State Option Pricing Model, Black-Scholes Option Pricing Model
Stocks and Bonds as Options
Real Options
Warrants and Convertibles
Warrant Pricing
Value of Convertible Bonds (Straight Bond Value and Conversion Value)
Risk:
11
Analysis of Risk and Return: The Capital Asset Pricing Model (CAPM)
The Return and Risk for Individual Securities and Portfolios,
Efficient Portfolio, Diversification, The Optimal Portfolio, Beta, CAPM
12
Analysis of Risk and Return: The Arbitrage Pricing Theory (APT)
Factor Models, CAPM and APT
Capital Budgeting:
05
Net Present Value versus Other Alternative Investment Rules
Net Present Value, Internal Rate of Return, Profitability Index,
Payback Period, and Average Accounting Return
06
Cash Flow and Capital Budgeting
Incremental Cash Flows
Investments of Unequal Lives: The Equivalent Annual Cost Method
13
Capital Budgeting and Risk
Financial Leverage and Beta, Cost of Equity and Debt, WACC
Capital Structure:
16
Capital Structure: Basic Concepts
Modigliani and Miller: Propositions I and II, No Taxes
Corporate Taxes, Value of the Levered Firm, WACC
17
Capital Structure: Disadvantages of Debt Financing
Bankruptcy Costs, Agency Costs
Miller Model, Personal Taxes
18
Valuation and Capital Budgeting for the Levered Firm
Adjusted Present Value (APV)
Flow to Equity (FTE)
Weighted Average Cost of Capital (WACC)
Interactions of Investment and Financing Decisions
Dividend Policy:
19
Irrelevancy of Dividend Policy
Personal Taxes, Issuance Costs, Agency Costs, Information Asymmetry
Derivatives and Hedging Risk:
25
Forward, Futures, Swaps, Duration Hedging
Analysis of Financial Statement:
03
Financial Statements Analysis and Long-Term Planning
Financial Ratio Analysis
International Finance:
31
29
International Corporate Finance
Foreign Exchange Markets,
Purchasing Power Parity (PPP), Interest Rate Parity (IRP)
International Bond Markets
Special Topics:
Mergers and Acquisitions
Synergy from Acquisitions
30
Financial Distress
Bankruptcy Liquidation and Reorganization
14
Corporate Financing Decisions and Efficient Capital Market
Efficient Market Hypotheses and Evidence
20
Issuing Securities to the Public
Announcement of New Equity and the Value of the Firm
Initial Public Offering (IPO)
15
Long-Term Financing
Callable Bonds and Bond Refunding